Bitar gives himself up.....

Ray Bitar, the chief executive of Full Tilt Poker, has been arrested after voluntarily surrendering to U.S. law enforcement and is being held in New York, according to a person familiar with the matter.

Bitar, who is from southern California, remained in Ireland, where Full Tilt Poker was headquartered, ever since he was indicted in the federal crackdown on the U.S. online poker industry last year. The FBI arrested Bitar on Monday morning upon his arrival at John F. Kennedy International Airport. Bitar pleaded not guilty to the federal charges in a late-afternoon hearing in federal court in Manhattan. He faces up to 145 years in jail if he is convicted on all counts filed against him by the government.

Federal prosecutors in Manhattan have also filed a superseding indictment against Bitar detailing fresh allegations regarding Bitar’s alleged efforts to conceal Full Tilt’s cash crunch that resulted in the company being unable to repay player money following the Aprill 2011 crackdown on online poker. Preet Bharara, the U.S. attorney in Manhattan, has said that Full Tilt was operating like a Ponzi scheme.

“I returned voluntarily to the U.S. from Full Tilt’s headquarters in Ireland to face the charges against me,” Bitar said in a statement. “I know that a lot of people are very angry at me. I understand why. Full Tilt should never have gotten into a position where it could not repay player funds.” Bitar added: “For the last 15 months, I have worked hard on possible solutions to get the players repaid. Returning today is part of that process. I believe we are near the end of a very long road, and I will continue to do whatever is required to get the players repaid, and I hope that it will happen soon.”

According to federal prosecutors in Manhattan, Bitar misled Full Tilt’s customers about the reason Full Tilt could not repay U.S. players their money after the federal government effectively shut down the web site. Full Tilt told U.S. players in a press release it was limited by “legal and jurisdictional issues,” but Bitar knew the real reason was that players’ money had been spent by the company and distributed to its owners, the new legal filing says. The feds point to the $60 million Full Tilt had on hand, while owing $390 million to players around the world on March 31, 2011. The government claims Full Tilt owes players in the U.S. and around the world $350 million.

At the same time, Full Tilt slowed down the payments of international withdrawal requests, claiming it was conducting anti-money laundering checks while “Bitar continued to encourage players outside the United States to make new deposits with the company with the assurance that their money would be safe,” the feds say.

Federal prosecutors claim that Bitar knew that Full Tilt was dependent on fresh player deposits to meet the backlog of player withdrawal requests, but that he and Nelson Burtnick continued to draw salaries from the company, collectively receiving several million dollars after the federal crackdown on April 15, 2011. “In effect, Full Tilt Poker operated what was, by then, nothing more than a Ponzi scheme,” the superseding indictment says. Burtnick, the only other Full Tilt employee to be indicted, remains at large, according to an individual familiar with the situation.

In addition, Bitar on June 12, 2011, sent an email to Full Tilt Poker’s other owners, advising that the company should not issue a press release revealing bad news because it would trigger “a possible new run on the bank” at a time when the company “can’t even take a 5 million run,” the new legal document filed by the federal government says.

Bitar is the biggest catch yet for federal prosecutors in Manhattan, who last year indicted 11 individuals involved in the online poker industry for operating illegal gambling businesses and shut down the U.S. facing web sites of PokerStars and Full Tilt Poker. Federal prosecutors in the government’s online poker case, led by Assistant U.S. Attorney Arlo Devlin-Brown, have secured guilty pleas from six of the 11 individuals. They have also pursued a $3 billion civil forfeiture case against the online poker companies.

An earlier effort by federal prosecutors in Manhattan to negotiate a resolution to their civil forfeiture claims against Full Tilt partly through a sale of its assets to a French company failed amid issues like paying back players. PokerStars, the world’s biggest online poker company, which has also been the subject of forfeiture claims by the government, has more recently been engaging in similar negotiations with federal prosecutors.

While working as a day trader at a Los Angeles prop shop, Bitar started Full Tilt Poker with poker champion Chris “Jesus” Ferguson. He got significant help from another poker pro, Howard Lederer, to build the company into the world’s second-biggest online poker company. The company played cat-and-mouse games with the federal government, which took the position that online poker violated U.S. law, for years until the feds shut down its U.S. facing web site last year. Afterward, players from the U.S. and around the world were unable to withdraw money they had deposited on the site, leading Bharara to call Full Tilt a $300 million fraud because the company did not maintain sufficient funds. Lawyers for the company and its key owners objected to the term Ponzi scheme, but Bharara is not shying away from describing Full Tilt in such a fashion. Bharara also added Ferguson and Lederer to the government’s civil forfeiture proceeding against Full Tilt last year.